What Is Flash loan?

A flash loan is an uncollateralised loan in decentralised finance that must be borrowed and repaid within a single atomic blockchain transaction. Flash loans enable traders and protocols to access large amounts of capital instantly without upfront collateral, provided they repay the loan amount plus a fee before the transaction completes. If the borrower cannot repay, the entire transaction reverts automatically, eliminating credit risk for the lender. Common use cases include arbitrage across decentralised exchanges, liquidations of undercollateralised positions and collateral swaps.

See also

• Lending protocol

• Aave

• Smart contract

• MEV

• Liquidation

• Decentralised finance